The booming demand in Europe and Asia has led to growing concern that huge swaths of rainforest are being cut down to make way for plantations - damaging important eco-systems on which animals and local people depend - and threatening the survival of one of the world's last great apes, the orang-utan, the poster boy for a gathering global campaign. Rainforest destruction also accounts for about a quarter of global greenhouse gas emissions, blamed for climate change.

Asda has become Britain's first supermarket chain to tell suppliers it will not accept products unless they can guarantee their palm oil is from sustainably run plantations. Body Shop, the toiletries and cosmetics company, has established a sustainable organic supplier in Colombia. Asda has banned palm oil sourced from the worst affected regions in Borneo and Sumatra and within a year hopes to have banned all unsustainable palm oil from 500 products.

Later this year retailers and manufacturers across Europe who have joined the Roundtable on Sustainable Palm Oil are expected to publish details of how they will create a network of certified sustainable plantations. The move by Asda and Body Shop prompted calls for other companies to speed up the changes.

'It sends a very strong message to the Indonesian and Malaysian governments that, if they don't stop destroying rainforests, they'll be destroying their international market,' said Ed Matthew of Friends of the Earth. 'Our fear is that all the supermarkets have joined the Roundtable but they are not going to really implement the policy. What we saw when we got these companies to join is once one joined, another joined and it built up a head of steam. If they are now competing with each other to say, "We're not going to source it from Borneo or Sumatra", they are likely to do the same thing.'

The move to crack down on the damage caused by palm oil production follows a three-year intensive campaign by environment groups that won Friends of the Earth an award in this year's Observer Food Monthly awards.

Chris Brown, Asda's head of sustainable sourcing, said it would take time to work with suppliers to find sustainable supplies, but the supermarket was starting before the Roundtable report because of the speed of rainforest destruction. Friends of the Earth calculates an area the size of Wales is being cut down in Indonesia alone every year, and a 'major driver' is palm oil. 'I don't want to be associated with orang-utan habitat destruction,' said Brown. 'We can wait while committees pontificate, or say, "Let's get on with it".'

Body Shop, which has 2,200 stores in 57 countries, said within six months it planned to source only sustainable palm oil for soap, which accounts for 80 per cent of its use of the ingredient.

Given the scale of global demand for palm oil, a shift to sustainable production will be difficult in the near future, but supporters say there is scope to ban crops from newly cleared forests because of inefficient practices and 'millions of hectares' of already cleared forest land.

Rikke Netterstrom, Body Shop's head of ethical policy, called on other companies to follow to drive producers of unsustainable oil out of business: 'There's a definite tipping point once you get sufficient volume to drive the price down for the whole supply chain.'